Financial Conduct Authority
Creditors’ voluntary liquidation - FCA publishes first supervisory notice issued to Alexander David Securities Limited - 4 July 2022
The FCA has published a first supervisory notice (dated 29 April 2022) issued to Alexander Securities Limited (ADSL) (the Notice), together with a press release announcing that ADSL has entered creditors’ voluntary liquidation.
ADSL is an FCA regulated firm, which was authorised to conduct investment related activities. ADSL provided corporate finance advisory services on, among other transactional work, initial public offerings, secondary fund raisings, mergers and acquisitions, and debt offerings. Its clients comprise corporate entities and fund managers.
The FCA has concluded that it is necessary to exercise its power under sections 55L(2)(a) and (c) of FSMA 2000 to impose certain requirements with immediate effect on ADSL: (i) because it is failing, or likely to fail, to satisfy the Suitability and Appropriate Resources Threshold Conditions, and/or (ii) to advance the FCA’s operational objectives, including on consumer protection. The requirements include that:
ADSL must not, without the prior written consent of the FCA, take any action which has, or may have, the effect of disposing of, withdrawing, transferring, dealing with or diminishing the value of any assets it holds or receives, for itself or on behalf of another; and
ADSL may continue dealing with, or disposing of any of, its own assets in the ordinary and proper course of business provided that the sum or value of such dealings or disposals, whether as a single transaction or a combination of related transactions, does not exceed £1,000 (or £3,000 in relation to legal expenses).
The requirements are principally based on the FCA’s serious concerns that ADSL’s conduct is posing a significant risk to consumer harm, including that:
- ADSL is not a fit and proper person in relation to the regulated activities it carries on, or seeks to carry on, as it has failed to pay redress relating to seven decisions upheld by the Financial Ombudsman Service (FOS) against the firm. These complaints relate to investment advice given by appointed representatives of ADSL to transfer the customers’ pensions into self-invested personal pensions and to invest those funds in unsuitable investments;
- ADSL has failed to pay the FOS £3,900 in fees for six cases involving the firm, which the FOS has handled; and
- there are 32 open cases against ADSL, most of which are either at the investigation stage or have been referred to the FOS for decision. Assuming that the FOS upholds 27 of the 32 cases (based on an 85% average), ADSL’s potential liability is estimated to be approximately £1,138,550 (based on an average claim value of £41,858). This is substantially in excess of ADSL’s net assets of £151,458 as at 31 December 2021 and its total cash balance of £433,353 as at 26 April 2022. ADSL has not satisfied the FCA that it has sufficient resources to meet its potential liabilities to the complainants.
The FCA indicates that the requirements should take immediate effect as this conduct demonstrates that ADSL is unable to manage its affairs in a sound and prudent manner and is putting consumers at risk. They remain in force unless, or until, varied or cancelled by the FCA.
The FCA indicates that, following its issue of the Notice to ADSL, it remained concerned that ADSL could not meet its debts as they fell due. The director and shareholder of ADSL then took steps to place the firm into creditors’ voluntary liquidation and joint liquidators have been appointed.
FCA First Supervisory Notice: Alexander David Securities Limited (469150)
Press release: Alexander David Securities Limited enters liquidation